My guess would be that Apple had to set up a large organization to do this reviewing very, very quickly and ended up with a bunch of people who can quickly go down a very literal laundry list of things to check, but don’t have the time, expertise, or incentive to make nuanced judgements about an app’s suitability.
I suspect that almost every complaint people have about the App Store is related to the fact that Apple set it up practically overnight by the standards of a large software project. They’re making it up as the go along, and it shows.
I think Phil Schiller’s email regarding Ninjawords hints at this too.
And I keep thinking about the fact that they’ve built the App Store on a foundation that was originally intended for music and movies.